Since the time of our previous report, the old crop May UK wheat price has risen to £152.75/T on the Nov 20 contract and £162.50/T November 20 contract. News of a trade deal being close to conclusion between China and the US has supported Chicago trading, and in turn, other markets followed. The volumes that have been traded have been limited, with sellers still `out the market’ and buyers only just starting to return to the market in the main. Imported maize is now looking more cost effective than wheat or barley for some buyers, it looks like the wheat price is capped in the short term.
The UK market is still stuck between the bumper crop of 2019 and a potentially smaller 2020 harvest. This potentially smaller 2020 crop and Brexit has prevented wheat trading lower. Despite there still being potential for improvement in the UK planting percentage and a favourable spring/summer, the market is focused on facing potential crop size of as low as 10-12 MlnT UK wheat. Exports are low as the UK focuses on stocks.
Paris wheat futures started the week on a 6 month high, with potential supply issues in new crop due to negative weather conditions reported in many of the main export areas such as Russia and Australia. However, with reduced pressure on the US markets and the Black Sea now expecting a more buoyant crop in 2020 prices have eased slightly. The Black sea region is reporting the crop to be in a positive state and could potentially compensate for lower expectations in the UK and EU in terms of worldwide crop. With prices for imported Black sea maize already favourable and replacing some of the wheat used for some UK consumers, especially in the North, the supply and demand balance sheet has potential to swing again before the end of 2020.
Currency has remained relatively stable since just after the election at around $1.3 but with a USDA report and a China/US trade deal expected in the current month, along with Brexit back in the mix, there is much potential for volatility.
Expectation that the Phase 1 China/US trade deal will be signed this month and buying will start within the month from signing is supporting prices in the Soya bean complex in the short term. However, it should not be missed that any US gain will be at the expense of other origins and potentially free up other materials that have been being swallowed into China in large quantities during the trade dispute, such as sunflower. South America has experienced unprecedented demand for Soya from China and therefore planted record levels to maximise the newfound demand. If China switches back to the US and normal trading is re-established, then the base price could drop and the availability of South American soya in the EU and UK could increase. Also consider that the crush levels (soya processing) are seemingly plentiful at the moment, as seen by the recently stable US price for soya in $. US meat products are also expected to benefit from the Phase 1 deal while the Chinese Hog population recovers form ASF, so the 2020 market may be very different to 2019. Soya oil prices remain high relative to the rest of the soya complex, with Palm oil shortages supporting prices for its alternative in the oils sector.
The UK has for a long time been leading science on vital areas of interest. This story is a great example. Scientists at the University of Manchester have been working on what makes the perfect head of beer.
The study published in the journal Chemical Communications used the world’s most intense neutron sources at the Institute Laue-langevin in France to fire neutrons at liquids to make a foam. Just like light reflecting off a shiny object, the neutrons reflect off the liquid, and a computer can help measure information about the liquid’s surface. This tells us that the molecular level information that we cannot see with the eye, even on mixtures of liquids, is helping us to develop the ideal foam level in formulations for products such as shampoos, fire-fighting foam, and washing detergents for machines where foam is undesirable and most importantly beers where the head lasts all the way to the bottom of the pint!
Cheers and wishing you a successful 2020 from all at Humphrey Feeds!
Brought to you by Melanie Blake and Martin Humphrey
